Steel Authority Of India Limited vs State Of Jharkhand And Ors

Heard Mr. M.S. Ganesh, learned Senior counsel appearing for the petitioner and Mr. Ajit Kumar, learned Advocate General and Mr. Manoj Tandon,

learned Additional Advocate General-IV appearing on behalf of the respondent-State.

At the outset, learned counsel appearing for the respondent-State submits that this matter is listed for interim relief. The State has not filed counter

affidavit as yet and they are inclined to file counter affidavit in this matter.

The petitioner, in this writ petition, has prayed for declaring and striking down the letter of demand dated 18.11.2019 issued by the District Mining

Officer, Chaibasa, whereby, the amount equivalent to the royalty already paid on the amalgamated lease area from 07.03.2018 to 21.11.2019 at

approximately Rs.69 Crores has been demanded.

Mr. M.S. Ganesh, learned Senior counsel appearing for the petitioner submits that the impugned letter of demand does not show that the statutory

conditions precedent for issuing such demands contained in Section 17A(2C) of the Mines and Minerals (Development and Regulation) Act, 1957 read

with Rule 5(1) of the Mineral (Mining by Government Company) Rules, 2015 have been satisfied. He further submits that Section 17A(2C) has no

retrospective operation as this has been enacted on 12.01.2015 and Rule 5(1) of the Rules, 2015 has also got no retrospective operation as this Rule

was enacted on 03.12.2015. He further submits that Rule 5(1) stipulates two conditions, firstly the liability would be to pay an amount equivalent to a

percentage of the royalty and not an amount equivalent to the royalty as demanded in the impugned letter of demand and secondly, such amount had

to be notified by the Central Government in each case and not conjured up by the State Government as depicted in the impugned letter of demand. He

further submits that there is nothing on record to the effect as to whether the Central Government has come forward with any notification regarding

Rule 5(1) of the Rules, 2015 or not. He further submits that after receiving demand notice, the petitioner represented before respondent no.3 with all

facts and requested to provide copies of the Central Government's Gazette notification under Rule 5(1) so that the petitioner may comply for the

demand, but the same has not been fulfilled. He further submits that the impugned letter of demand is not in accordance with the spirit of the Act,

1957. He also submits that there is procedure of transporting iron ore and if iron one is not transported to the site of the Company, the entire furnace

has to be re-energised, which will cause irreparable loss to the Company. He further submits that there is procedure of taking transportation permit

and the same is being issued. He also submits that there is threat if the amount in question will not be paid, the transportation permit will be stopped.

He further submits that the petitioner is a State within the meaning of Article 12 of the Constitution of India and it will not run away.

Per contra, Mr. Ajit Kumar, learned Advocate General appearing for the respondent-State submits that there is no illegality in the impugned letter of

demand. By way of referring Section 8(A) of the Act, 1957 and Rule 5(1) of the Rules, 2015, he submits that Rule 5(1) itself is self explanatory,

wherein, it is said that the Company shall pay the amount equivalent to the royalty paid in terms of Schedule-II of the Act. He refers Schedule-II of

the Act, particularly Sl. no. 24 and submits that this notification is already there. He further submits that it is not the spirit of the Act that for each and

every Company, the Central Government will notify separately. He further submits that if not retrospectively, at least the petitioner is liable to pay

royalty with effect from the date when the amendment has been brought in the Act.

Mr. Manoj Tandon, learned Additional Advocate General-IV supplements the arguments of Mr. Ajit Kumar and submits that Rule 5(1) has not been

challenged by the petitioner. The petitioner has got no prima facie case. The balance of convenience is also not in favour of the petitioner. He further

submits that Sub-rule (2) of Rule 5 of the Rules, 2015 casts duty upon the petitioner to pay the amount.

By way of reply, Mr. M.S. Ganesh submits that Schedule-II is not in terms of Rule 5(1) of the Rules, 2015. He also submits that at Sl. no. 24, iron ore

is prescribed for demand of 15% of the average sale price and in that view of the matter, the impugned order is also not in line of Schedule-II. He

further submits that law is well settled that only prima facie case and balance of convenience are not the requirement for interim order. He further

submits that if the letter of demand has been issued against the statute, the Court is well within its jurisdiction to stay the impugned letter of demand.

To substantiate his argument, he relied upon the judgment rendered by the Hon'ble Supreme Court in the case of Benara Valves Ltd. & Others v.

Commissioner of Central Excise & another, reported in (2006) 13 SCC 347.

Paragraph 8 of the said judgment is quoted herein below:

“8. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance

it appears that the demand raised has no legs to stand on, it would be undesirable to require the assessee to pay full or substantive part of

the demand. Petitions for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order

requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has

to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a

licence to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where

denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen’s faith in the impartiality of

public administration, interim relief can be given.â€​

By way of relying upon this judgment, Mr. M.S. Ganesh submits that the case of the petitioner is on better footing. There is no clarity in the impugned

letter of demand as to whether the demand has been issued by way of royalty, tax or fee, whereas in the case of Benara Valves Ltd. (supra) the

matter relates to the Central Excise Act and the Hon'ble Supreme Court interferes in that case.

Having heard learned counsel for the parties, this Court finds that impugned letter of demand has been issued without compliance of the Rule 5(1).

Even by way of demand by the petitioner by way of filing their representation, respondent no.3 was not having any notification of the Central

Government. The argument of learned Advocate General with regard to Schedule-II of the Act cannot be accepted as it says about the demand of

15% of average sale price on ad valorem basis and the impugned order is also not in line of that Schedule. If the transportation challan is not provided

to the petitioner, it will cause irreparable loss to the petitioner. In absence of iron ore, the plant of the petitioner may not run and for restarting it, the

petitioner has to re-energise the plant. It is well settled principle of law if the procedure is prescribed in statute, one has to act in accordance with the

statute. Accordingly, there shall be stay of the impugned letter of demand dated 18.11.2019, issued by the District Mining Officer, Chaibasa contained

in Annexure-1 to this writ petition, till the next date of hearing.

Both the parties are ready for final disposal of this writ petition.

Mr. Manoj Tandon, learned Additional Advocate General-IV submits that the respondents will file counter affidavit within four weeks.

Mr. M.S. Ganesh, learned Senior counsel appearing for the petitioner submits that the petitioner will file rejoinder to the counter affidavit within four

weeks thereafter.

The parties shall exchange their affidavits.

At the request of the learned counsel for the parties, list this case on 16.03.2020 for final disposal.

Accordingly, I.A. No. 11403 of 2019 stands disposed of.